Women On French Corporate Board Of Directors: How Do They Differ From Their Male Counterparts?

Our research aims at exploring individuals characteristics of women on Boards in the French context. In the first part of our paper, we discuss the different theoretical frameworks which supported the business case of gender diversity on Boards of Directors and expose our hypothesis regarding differences in women and men characteristics. The second part presents our methods, measurements and data. Then, we focus on our empirical study. Our sample consists of the French Index SBF 120 companies. We studied the profile of 1,250 directors collecting information from the firms annual reports of year 2010, using various scales defined by previous research on that field in the AngloSaxon literature. Our findings confirm that integrating women on boards has an impact on the Human and Social Capital of Boards but not as much as might have been expected. It is worth noting that men and women board members seem to build their human and social capital through the same educational process in France. Nonetheless, our work shows significant differences between men and women regarding professional experience and board member status

The Importance of Director External and Internal Social Networks to Stock Price Crash Risk

Prior research documents that information transmitted via director networks affects firms’ policies and real economic activities. We explore whether information flow through director networks influences managers’ ability to hoard bad news. We find that the extent of external connections of the board of directors is negatively associated with future stock price crash risk. Additional analysis implies that this evidence is driven by firms with more powerful executives, with weaker auditor monitoring, or subject to strong investor protection, and by directors with greater monitoring incentives or responsibilities, with less firm-specific knowledge, and with more valuable reputations to protect. We further find that director external network size is negatively associated with a variety of bad new hoarding signals. Collectively, our research lends empirical support for the monitoring view under which better informed directors narrow the scope for bad news hoarding evident in stock price crash risk. In another series of tests, we fail to find evidence consistent with the information leakage view under which directors pass sensitive firm-specific information to connections who trade on the information before its public release. Other analysis helps dispel the concern that the endogenous match between directors and companies is spuriously responsible for our core results. In contrast to our strong, robust evidence on the role that director external networks play, we only find some results implying that CEO-director internal networks shape stock price crash risk.

The Impact of Social Connections on Merger Performance

This thesis investigates the impact of social connections on merger performance using a sample of U.S. firms. Specifically, we classify connections into four types based on previous literature: Type 1 connections refer to firms with overlapping directors or senior managers (Cai and Sevilir, 2012); Type 2 connections refer to situations where a director or senior manager from the acquirer and another director or senior manager from the target simultaneously serve on a third firm around the announcement date of the deal (Cai and Sevilir, 2012); Type 3 connections refer to situations where a director or senior manager from the acquirer and another director or senior manager from the target share a common educational tie or a past employment tie (Ishii and Xuan, 2014); Type 4 connections refer to the existence of cross-holding institutional investors, defined such that an institutional shareholder holds both shares of the bidder and the target around the announcement of the transaction. We find that the many of the conclusions reached by prior literature with respect to the influence of each of these types of social connections on the value creation of acquiring firms are not robust. In particular, they are sensitive to changes in sample period, industries, model specification and sample selection criteria. In addition, our results suggest that, on average, cross-holding institutional shareholders have positive total returns around the merger announcement date, while they tend to realize negative returns once we constrain the sample to the deals with negative acquirer announcement returns. Our results also suggest that cross-holding shareholders have significantly higher returns from the acquirer and the target together than from the acquirer alone, and acquirers with larger percentage of cross-holding shareholders are associated with lower announcement returns. By systematically considering all possible types of connections in the merger context, we find that different types of connections are interrelated to a certain extent

The effect of CEO background risks on risk taking and firm performance

The motivation for this thesis is founded on the increasing studies on executive compensation as it relates to risk taking and firm performance which has resulted in inconclusive results. A large number of the empirical studies on executive pay have focused on agency theory alone to examine its effect on risk taking behaviour and firm performance. The purpose of this research is to contribute to existing knowledge on executive compensation by incorporating background risk theory as a means through which an understanding of executive compensation and its effects on risk taking and firm performance can be analysed. The background risk theory, suggest that the introduction of an additional risk when one has been committed to result in risk aversion. The study employs data from the London Stock Exchange with a sample of FTSE350 non-financial firms for the period 1997-2010. To achieve the objective of the study, the thesis is divided into three independent but related empirical chapters. The first examines the link between background risk and executive compensation-risk taking relationship. The second empirical chapter examines the effect of background risk on the relationship between executive compensation and firm performance. Lastly, the third empirical chapter examines some determinants of CEO background risk with a particular focus on CEO employment risk. The findings of the first empirical chapter provide strong support for the background risk theory. The study finds that the presence of background risk results in lower risk taking by CEOs. In addition, the study provides instances where background risk combined with the risk in the compensation package leads to risk aversion and less risk taking by the CEO. The second empirical chapter finds that even though compensation may result in better firm performance, the presence of additional risk known as background risk alters the relationship between compensation and firm performance. Specifically, the presence of background risk leads to a negative relationship between compensation and firm performance. The findings of the first two empirical studies inspired further research on the determinants of CEO background risk. The findings reveal that large boards and independent boards, increase the likelihood of CEO employment risk. However, CEO network size reduces the likelihood of employment risk

An Examination Of Ceo Reputation Decline And Repair In Response To Deviant Actions

Despite increasing interest in managerial reputation, little research in the management field has attempted to theorize and empirically examine reputation as a dynamic construct. This paper synthesizes prior reputation literature across disciplines to develop a model of reputation change. Using the context of executive termination it is hypothesized that the same managerial outcome (i.e. termination) carries varied meaning to stakeholders depending on the actions leading to and reason for termination and such meaning impacts the level of executive reputation decline and repair. Additionally, drawing on four established theoretical mechanisms in the reputation literature it is hypothesized that various traits, relationships, performance signals, and repudiation activities also influence the reputation repair of executives. Using survival analysis and a sample of 487 CEO terminations, results suggest the strongest influence on reputation repair to be executive traits and relational ties

Stock market reaction of political connections surrounding 2018 Malaysian general election

The aim of this study is to examine the relationship between politically connected firms (PCON), types of PCON (patronage, clientelism, nepotism, cronyism and Bumiputra ownership), the age of the PCON and stock market reactions surrounding the 2018 Malaysian General Election (GE). Analyses were conducted by utilising data from firms listed on Bursa Malaysia. The Ordinary Least Squares (OLS) regression method was used to test the hypotheses. Based on the efficient capital market theory, Bursa Malaysia is deemed as a semi-strong efficiency market since the Malaysian stock market adjusted efficiently to the news of Barisan Nasional being defeated for the first time in the 2018 Malaysian GE. The political uncertainty theory indicated that firms were severely affected when exposed to high uncertainties of the government in power. Thus, significantly negative abnormal returns were experienced by PCON, while non-PCON showed significantly positive abnormal returns. The market also reacted significantly and negatively to types of PCON, such as patronage firms and clientelism firms. Furthermore, no significant differences were found between cronyism, nepotism, Bumiputra ownership, older PCON and stock market reactions. Further analysis using a non-parametric test showed that PCON types, such as patronage, clientelism and Bumiputra ownership firms contributed to a significantly negative stock market reaction. This indicates that these types of firms were statistically lower stock market reaction than non-PCON. Further analyses generated a unique list of PCON related to the main political figures namely, Mahathir, Daim and Anwar, by refining and extending previous studies based on Malaysia's changing political scene. The outcomes of these studies may assist regulators, investors and PCON in managing their relationships with and in the stock markets

The Impact of Sarbanes-Oxley Changes and Board Independence Power on Selected Governance Practices at the Board Level

The Sarbanes-Oxley Act (SOX) and related stock listing requirements now require boards of publicly traded companies to have a majority of outside, independent directors to provide a counterbalance to the power of management on the board. SOX also mandated the existence of three board committees, audit, nominating, and compensation which had to be comprised solely of independent directors. Using a sample of 335 firms and 3,675 observations from the S&P 500 from 1999 to 2009, I use panel Poisson regressions in pre-SOX (1999-2003) and post-SOX (2004-2009) periods to test the effect of SOX structural changes at the board and committee levels on governance practices as measured by the Entrenchment Index. I first consider the direct relationships, suggesting positive relationships between the mandated requirements of board independence, the presence of audit, nominating and compensation committees, and the independence of these committees on governance practices supporting shareholder value at the board level in the pre- and post-SOX periods. In the pre-SOX period I find significant relationships between board independence and governance practices as well as significant relationships between the existence of audit, nominating, and compensation committees and governance practices; however, they were not in the direction hypothesized. I find no significant relationships in the post-SOX period. I then create a new construct, board independence power (comprised of dimensions of structure/prestige, ownership and expertise) to measure the latent power of the independent members of the board. I validate the construct quantitatively through a factor analysis and interviews with board members and lawyers specializing in corporate governance. I hypothesize that board independence power positively moderates the relationship between the SOX structural changes and selected governance practices supporting shareholder value at the board level. In the pre and post-SOX periods, board independence structure/prestige power significantly moderates the relationship between the existence of the mandated committees and selected governance practices supporting shareholder value when they were lagged for one and two time periods. Results of this study demonstrate that the SOX structural changes by themselves have not led to better governance practices by boards. This is important given the organizational attention, energy and cost necessary to fulfill the SOX requirements

An Empirical Study of Banking Ties and its Implication for Further Research

We study the effects of network connections between banks issuing stock recommendations and the corresponding board of directors. Based on data we extracted from the Standard & Poor’s Capital IQ database, we empirically identify a large number of such banking ties forming a unique database. Following recent focus on social network studies and the need for more transparency in the financial market for investor protection, our database is the foundation for further study. We raise and propose relevant research question to be pursued

Ceo's networks and companies' performance: evidence from Malaysia

This study seeks to examine the relationship among CEO's networks and companies' performance. Accordingly, two contradicting theories are rooted in this study that estimates the opposing results respectively. In proportion to social network theory, some would predict a positive linkage between the CEO's networks and performance of entities; whereas the agency theory anticipates a negative relationship exist in the CEO's networks and financial performance of the companies. Derived from the measures that employed in this study to evaluate the CEO's networks effect, the empirical results for 100 non-financial companies in Malaysia suggest that CEOs with longer tenure build stronger networking and the companies with large board size are keenly looking for CEOs with an outsized social network. As well, it is observed that the CEO's networks have significant effect on companies' performance particularly sales growths in positive manner. However, neither any significant relationship can be observed between the CEO's networks and return on assets. Lastly, some facts are able to ascertain in Malaysia context for the argument that better-connected CEOs delivery value to companies performance in the course of their social network as consistent with social network theory. In future study, it is suggested to employ different and large sample size in same setting, or different site location in addition to considering different boundary condition of social ties